PayPal opens up a new development strategy

At its first technology developers conference this week, eBay’s payment processing unit unveiled a new growth strategy based on sharing its software code with developers and providing a new software tool kit for building mobile payments applications.

At its first technology developers conference this week, PayPal, the payment processing unit of eBay Inc., unveiled a new growth strategy based on sharing the software code for its PayPal X global payments platform with developers and providing a new software tool kit for building mobile payments applications.

"The whole world is going digital, and the future of how we communicate, how we get information, and even how we transact, is in the hands of developers," says Scott Thompson, PayPal`s president. "The network is the platform on which the potential of digital money will be fully realized."

PayPal, which also introduced this week a web portal for developers at X.com, says developers can use the application programming interface of its X platform to build person-to-person as well as b2b payment applications on any commerce platform, including mobile phones and online social networks. In addition, developers will be able to build PayPal payment acceptance into their own applications, so that customers would not have to enter a separate PayPal web page to make a payment.

A developer of an online software game, for example, could imbed a PayPal payment feature that wouldn’t require a customer to link to a separate PayPal site to complete a purchase. Similarly, a developer could develop PayPal payment features to be used on Facebook pages.

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Osama Bedier, PayPal’s vice president of platform, says a key component of PayPal X development will be the company’s mobile payment software development kit, which will become available in the first half of next year. The mobile software development kit will initially support only Apple Inc.’s iPhone but eventually support any mobile platform.

PayPal notes that developers would need to work with only a few lines of software code to integrate a PayPal checkout button onto a mobile device to accept mobile payments.

"Mobile transactions have been notoriously tough to monetize," Bedier says. "With the new software development kit, just tell us how much you want to get paid and what the payment is for, and the funds will be transferred in seconds."

Colin Sebastian, a stock analyst who follows eBay for Lazard Capital Markets, and who attended the PayPal X Innovate conference in San Francisco this week, says technology development is necessarily a core growth strategy for PayPal as well as eBay, as both face growing competition from e-commerce and online payment initiatives from companies like Facebook and Google Inc.

PayPal is off to a good start, Sebastian says. “PayPal X will help drive increasing innovation for PayPal and cement the company’s leadership position in the robust online payment market,” he says.